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Is United Rentals (URI) Stock Undervalued Right Now?

Zacks Equity Research

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is United Rentals (URI). URI is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 6.30, which compares to its industry's average of 11.09. URI's Forward P/E has been as high as 9.69 and as low as 4.87, with a median of 6.44, all within the past year.

URI is also sporting a PEG ratio of 0.36. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. URI's industry currently sports an average PEG of 0.91. Over the past 52 weeks, URI's PEG has been as high as 0.55 and as low as 0.27, with a median of 0.36.

Finally, our model also underscores that URI has a P/CF ratio of 3.65. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 13.70. Over the past year, URI's P/CF has been as high as 4.69 and as low as 2.43, with a median of 3.62.

Value investors will likely look at more than just these metrics, but the above data helps show that United Rentals is likely undervalued currently. And when considering the strength of its earnings outlook, URI sticks out at as one of the market's strongest value stocks.


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